Tax Decision Support System Vikram B. Thadeshvar (44) Sailendra Sharma (55)

A Decision Support System (DSS) is an interactive computer-based system or subsystem intended to help decision makers use communications technologies, data, documents, knowledge and/or models to identify and solve problems, complete decision process tasks, and make decisions. It is a general term for any computer application that enhances a person or group’s ability to make decisions. What is a DSS?

Process 1960 1980 1990 Mainframes Operational Systems Online Analytical Systems

Changing Business Needs ACTION WHY WHAT Prediction Forecast Business Need Complexity

Challenges before tax administrators Readily access and analyze the tax information Effectively and accurately identify the area of non-compliance Better understand the taxpayers Formulate better legislative policies Achieve higher degree of accuracy in revenue forecast Optimize the operational cost

Readily access and analyze the tax information

Effectively and accurately identify the area of non-compliance

Better understand the taxpayers

Formulate better legislative policies

Achieve higher degree of accuracy in revenue forecast

Optimize the operational cost

Typical analysis a Decision Maker may perform by Business Type by Tax Type by Tax Period by Location by its distribution across the various income groups of the taxpayers Compare the revenue collected and balance due for the past 5 years Evaluate the effectiveness of audit programs in identifying non-filers and under reporters Trends in the collected and due amounts in the various Payment Plans at various stages and defaulters Evaluate the productivity of various departments in handling cases over the years Evaluate the effectiveness of external data in identifying non-filers by showing the number of such taxpayers by the payment plan type by the tax period by the income group by the tax type by tax period by location by business type by tax period by location by business type

Compare the revenue collected and balance due for the past 5 years

Evaluate the effectiveness of audit programs in identifying non-filers and under reporters

Trends in the collected and due amounts in the various Payment Plans at various stages and defaulters

Evaluate the productivity of various departments in handling cases over the years

Evaluate the effectiveness of external data in identifying non-filers by showing the number of such taxpayers

Tax Collection Analyze the trends in tax revenue for revenue enhancement Evaluate uncollected tax revenue

Analyze the trends in tax revenue for revenue

enhancement

Evaluate uncollected tax revenue

Problems in Transactional Applications Designed for real-time data entry and editing Data maintained is constantly changing Limited historical data is available for on-line comparisons Running Decision Support queries degrades the performance of the Transactional Application Complexity in achieving Comparisons, Aggregations, Rankings, Running totals etc.

Designed for real-time data entry and editing

Data maintained is constantly changing

Limited historical data is available for on-line comparisons

Running Decision Support queries degrades the performance of the Transactional Application

Complexity in achieving Comparisons, Aggregations, Rankings, Running totals etc.

Tax DSS Architecture “ A Data Warehouse is a subject-oriented, integrated, time variant and non-volatile collection of data in support of management’s decision-making process.” A Data-Mart contains a subset of the data available in an enterprise-wide data warehouse. Data Mining is Discovering meaningful new correlations, Patterns and trends Using Pattern recognition technologies, Statistical and mathematical techniques On-Line Analytical Processing (OLAP) Is a process to assist decision making by using tools to facilitate the analysis of multi-dimensionally structured business information. Tax Compliance Data Mart Tax Data Warehouse Data Warehouse Data Extraction, Scrubbing and Transformation OLAP tools EIS Query & Reporting Statistical Analysis Data Mining LAN WAN Internet Meta Cube Internal Data Sources External Data Sources External Sources Indv. / Corp. Tax App. Un-employment Tax App. Withholding Tax App. A/R System Source Data Validation Data Scrubbing Data Migration Data Transformation Data Warehouse

“ A Data Warehouse is a

subject-oriented,

integrated,

time variant and

non-volatile

collection of data in support of

management’s decision-making process.”

Data Mining is

Discovering meaningful new correlations,

Patterns and trends

Using

Pattern recognition technologies,

Statistical and mathematical techniques

Decision Support Methodology (DSM) Decision Support Analysis DSS Software Evaluation & Selection Operational Deployment and Support Prototype Development Revision & Enhancements Scoping of Prototype Project Evaluation Criteria Detailed Design System Construction Testing Demonstration Evaluation Functional Orientation Operational Training Deployment Maintenance Structured Interviews Decision Analysis Data Analysis Technical Analysis Conceptual DSS Orientation Plans & Prioritization Adaptation

Common Subject Areas Taxpayer Profiling Tax Collection Fraud Detection & Tax Non-compliance Legislative Change Impact Revenue Forecasting These Subject Areas can be viewed w.r.t to various common perspectives Business Type Location (States, City) Taxpayer (Demographic) Tax Type Tax Period (Year, Quarter, Months) Time (Year, Months, Events, Seasons)

Taxpayer Profiling

Tax Collection

Fraud Detection & Tax Non-compliance

Legislative Change Impact

Revenue Forecasting

These Subject Areas can be viewed w.r.t to

various common perspectives

Business Type

Location (States, City)

Taxpayer (Demographic)

Tax Type

Tax Period (Year, Quarter, Months)

Time (Year, Months, Events, Seasons)

Why Tata Infotech for Tax DSS? Large pool of resources Expertise in the Area Superior Solution Tax DSS Methodology Understand DSS Technology Make Things Happen

Revenue Forecasting Ability to formulate reasonable fiscal policies Incorporate the historical revenue trends and other governing estimate variables Provide the highest degree of accuracy in revenue forecasting Use of econometric models to improve the accuracy of forecasts

Ability to formulate reasonable fiscal policies

Incorporate the historical revenue trends and other governing estimate variables

Provide the highest degree of accuracy in revenue forecasting

Use of econometric models to improve the accuracy of forecasts

Advantages Tangible Benefits Improvement in non-compliance will increase tax revenue More cost effective decisions are enabled Better business intelligence is enabled Enhanced taxpayer Services Intangible Benefits Improved productivity Reduced redundant processing and support Ability to focus on business processes through complete analysis

Tangible Benefits

Improvement in non-compliance will increase tax revenue

More cost effective decisions are enabled

Better business intelligence is enabled

Enhanced taxpayer Services

Intangible Benefits

Improved productivity

Reduced redundant processing and support

Ability to focus on business processes through complete analysis

Conclusion Tax DSS holds great potential for dramatic business benefits Capitalizes on the potential value of the organization’s information Provide decision makers access to consistent, reliable and timely data Still much more to explore and enhance

Tax DSS holds great potential for dramatic business benefits

Capitalizes on the potential value of the organization’s information

Provide decision makers access to consistent, reliable and timely data

Still much more to explore and enhance

Thank You